Seattle Needs an “Incubator” Culture


Xconomy Seattle — 

If Seattle is to occupy a future place of dominance in the biotech world, it must foster more of an “incubator” culture. There is a “valley of death” between the well-funded labs of academia and private venture funding that is difficult to cross.

The National Institutes of Health funds non-profit institutions like universities for fundamental research. Whereas private venture dollars migrate towards technology that has already been proven to a level far beyond what is common in a university lab. So how does one raise capital to take technology from the lab to a venture fundable stage?

Attempting to bridge the chasm are things like federal Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) grants but they realistically take 12+ months to get, require an institutional affiliation, and “virtual companies” are ineligible—what madness! The reason my company would apply for such a grant is because we are a “virtual company” and need pay for early data generation (read: lab space and reagents). Even if I was willing to stomach the bureaucracy, and wait more than a year for a modest chance at getting the grant (which I’m not), we’d be ineligible anyway.

Washington’s own Life Sciences Discovery Fund (LSDF) seems to have recognized this problem and offers “commercialization grants” of up to $150,000. However, they only offer the grants to non-profits (last year 100 percent of them went to the University of Washington). I’ve been told that it is unconstitutional for the LSDF to give money to companies (our state prohibits direct investment into companies). It seems counterproductive as a strategy however, given that non-profits don’t commercialize things—companies do. It’s the entrepreneurs that take ideas from labs and build companies around them and unfortunately they are a group the state is explicitly not helping.

Seattle has a great angel investor scene, but few angels in the main networks feel qualified to be investing in early stage life science companies.

The only organization in Seattle that I’m aware of that addresses this need is the venture backed Accelerator Corporation. They provide funding, lab space, and business support for early stage startups. However, on average, they take on two to three companies a year—hardly enough to support the future of Seattle’s biotech empire by itself.

In our case we’ve had to turn to San Francisco … Next Page »

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Matthew Scholz is the CEO of Immusoft, a (currently) Seattle based biotech startup that is commercializing technology to program the human immune system. Follow @

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7 responses to “Seattle Needs an “Incubator” Culture”

  1. Andy Freeman says:

    Does Silicon Valley have the “incubator culture” that Seattle supposedly needs? If not, why does Seattle need it?

  2. Bob WilcoxBob Wilcox says:

    Many local industry leaders agree that the region needs to do better at starting companies. For medical technology startups, two things that launched in 2009 will bear fruit in 2010. WINGS, a new Angel investment group for medical technology in Washington, is now accepting applications ( Second, the Innovation Partnership Zone in Bothell was awarded $500,000 to launch a medical technology incubator. Keep watching xconomy for updates.

  3. Hmmmmmm Sounds familiar.
    Well – I think Seattle does have an incubator culture similar to what you mention above. And it started in a garage in a place that is zoned for medical. And we have all the tools needed to create value. Sure it’s tough to go after these small grants since it takes a year to even see the money, but if you truly believe in your idea and you know exactly what you need to do to bring it to a point of value, then take out a small loan/home equity line of credit and use EBay and auctions to acquire what you need. There are more “garages” out there now than there were when I was looking two years ago….and there’s plenty of materials available by EBay, etc. to generate what you need to do your work. It’s all do-able – but you’ll have to take on some risk by using your own money if you wish to start right away. Otherwise – as you indicated, you’re stuck in that catch 22 as a virtual company. But what you gain by doing so is a company with assets that you own 100% of and you get the data that will take it to the next level where you’ll be less diluted since you’ve raised the value bar.

    So you’re right – the incubator culture is needed, but we can’t wait for others to build it – we have to build it ourselves and since we’ve already started it here in Wallingford – it’s going to snowball and take on a life of it’s own as more come to generate their proof of concept – then more companies are created and hopefully more jobs.

  4. Blue Swan says:

    Agreed. This is absolutely what needs to be done.

    Venture capital funding no longer meets the microfinance requirements of the 21st century.

    Typically you basically need to give a person a “grant” to cover his salary for say 5 years to get an idea off the ground.

    The costs of capital infrastructure are almost nil these days of cloud computing. What does need to be funded are the creative individuals who will build the apps. Will some fail to make a profit? Probably…but maybe 1 out of 100 or even 1 out of 1000 will make enough to justify all the other investments.

  5. All entrepreneurs will agree with the posted sentiments about the need for such an environment. I think Seattle is already on its way to generating one, but its a slow road. Besides the groups already mentioned like Accelerator, ISB, WINGs and IPZ, we have others like the Zino society beginning to look the direction of biotech. Even UW Tech Transfer is beginning to take on more of a mindset of an incubator under Linden Rhoads with their EIR program and recently formed New Ventures Unit (see Luke’s interview posted today). I am sure San Francisco’s dynamic biotech start-up community did not happen overnight either. The key is for success here will depend on the successful. Reinvestment into the community from those who have thrived here built the Seattle tech start-up monster and biotech will be no different.

  6. Anthony Rodriguez says:

    A quick correction from my previous comment: The Rhoads Q&A was written this time last year (2/10/09) and not yesterday.